It’s PEACE! Russia and Ukraine have reached another cease fire
agreement (maybe their 5th?) which will begin Sunday. Let’s see if this
one holds? Ukraine cannot continue hostilities without the U.S.
supplying them. What will U.S. reaction to this agreement be? The
U.S. was specifically not invited to these talks, when has that ever happened
before? The big question in my mind is, do continue to arm them?
And if we do, what will this look like to the rest of the world? To
Europe? I view this agreement as one more well thought out move by
Russia, how can they be called the “bad guy” after this deal? We will
either have peace …or the U.S. will be seen in a very poor light by Europe
and it may spur more rapid movement Eastward, we will see! Is this for
real or merely more propaganda? My guess is yes, it is for real,
whether it stays for real without U.S. meddling is another question.
“Propaganda” has been standard “financial” operating procedure for
years. What I am alluding to is a major league push to downplay Greece
(and of course Ukraine) and the insolvency ramifications. First thing
Monday morning, while we continued to get the game of “deal or no
deal”, we were also being barraged with “Greece is not such a big
deal”. Greece IS a big deal and very well may be THE deal which exposes
the insolvency of the entire system.
As mentioned before, Greece in total may be $3 – $5trillion total
exposure, or more. This is a very large sum, just think back to 2008
where if Congress did not approve the “measly” (huge at the time!) sum of
$700 billion for TARP, we were told we would be thrown into the
dark ages and martial law. Already, Spanish and Italian yield
spreads and CDS have begun to widen. This is front running to the
contagion that will take place and spread from market to market. While
Greece itself in a normal world without CDS and other levered derivatives
really would not be such a big deal…it is now, because there is zero margin
(pun) left for error.
When, not if Greece defaults, triggers everywhere will be pulled.
Please do not tell me “but their debt can be extended 60-70 years into the
future” because this in and of itself is a default. Greek bonds will
need to be marked to market at only a few cents on the euro. Even
assuming a markdown of “only” 50% will destroy the balance sheets of
banks, central banks and the ECB itself. Losses will actually have to
be “booked” and capital ratios will be destroyed. In normal times these
capital shortfalls could be plugged with either debt or equity raises,
these are not options now and surely won’t be in crashing and illiquid
markets. To illustrate just how precarious the situation is (and not
even in “crisis” yet), central banks across the globe are ALREADY monetizing
more than 100% of debt issuance. Yes, this “is” currently working, has
outright monetization ever worked before? And now on nearly a global
scale? Monetization will work until one day it does no longer, what
will markets look like then? What will have value?
We are already seeing the contagion to Spain and Italy, both in the
same fiscal and monetary vice Greece is in. Unemployment, as in
Greece is rampant in Spain and Italy while both have debt ratios in
banana republic zones. I mention this because of the contagion
factor. Once Greece either quits, declines to pay or is kicked out of
the Eurozone, …or agrees to an unlikely restructuring, the euro itself will
collapse (again) in purchasing power. The Swiss may have kicked off the
devaluation, it very well may be the Greeks who finish it off.
This very well may end in a north and south euro or with a Eurozone with
several southern entities not included. A much stronger euro may be the
ultimate result should excess and bankrupt baggage be shed. Please
understand that the ECB itself holds Greek debt, at par, which supports the
value of the euro. Isn’t this is like two drunks trying to hold each
other from falling down?
Just as with the Swiss reset, trade all throughout Europe will be thrown
into disarray with huge overnight losses taken and business models rendered
obsolete. I believe some very big and long term business decisions will
need to be undertaken. Greece, Spain and Italy, as well as the rest of
Europe will need to decide “who” they will trade with going forward. This is
where Russia enters the picture and why European alliances with
Russia/China are so important. After a collapse of the euro and during
the thought process of “where to now?”, European industrialist will have a
decision to make. Do they continue to trade with the U.S., accepting
dollars for trade …or do they turn their attention East and probably toward a
gold ratio’d currency? In my opinion there will be a very large
deciding factor. Will Europe choose to do business with a region who’s
hey-day is behind them and who’s consumers are leveraged to the gills …or,
will they prefer to do business with a region who’s future is bright and has
well over 1 billion potential consumers who are not in debt and still saving
for their first big screen TV? Do you see? Do you see how
“natural” any pivot of Europe toward the Russia/China alliance is?
This thought process is of utmost importance to you as an individual
because the answer to the above question(s) will affect you directly.
Will the status quo hold? Will it snap? If it snaps, which way
will the world “lean”? The last two+ years have been designed
(choreographed) to show you the new world will lean West, toward the dollar
and away from gold. It is so important at this junction to ignore the
trees and see the forest for exactly what it is. We are on the cusp of
a New World Order, only not the NWO the neocons had envisioned. The
vast majority of the world, 135 nations or more are already preparing for a turn
from the dollar’s hegemony, away from false and lopsided trade, away from
ugly financial and diplomatic deals …and toward real and fair weights,
measures and business dealings.
Today’s juncture of time is very close to the equivalent of 1944 where
nations met in Bretton Woods, New Hampshire to decide on a new monetary,
financial and trade arrangement. A new “arrangement” is undoubtedly
coming. By agreement, by default (pun intended), peacefully or
forcefully. Gold by default, will be a very central pillar of whatever
new system arises, the rest of the world’s actions are plainly telling you
this. Know this and you have already won more than half the
battle! …The rest of the battle may not be quite as easy.
